U.S. Wins Solar Trade Case Against India’s Buy-Local Policies

Fonroche site in Bikaner, Rajasthan using First Solar modules. | Photo courtesy of First Solar.

Today, the World Trade Organization (WTO) ruled against India’s appeal to its February 2016 decision that ruled against India’s National Solar Mission’s buy-local policies. Under this initiative, solar power companies can secure government subsidies and long-term contracts to sell electricity to the Indian government. But many of these benefits are contingent on using solar cells and modules that are manufactured in India as a mean to boost the country’s solar capacity.

The United States launched its WTO case against the buy-local provisions of India’s National Solar Mission back in 2014. In February 2016, the WTO ruled in favor of the United States saying that the provisions accord less favorable treatment” to imported solar components, even while acknowledging that “imported cells and modules currently have a dominant share of the market for solar cells and modules in India.”

Today’s decision is the result of the appeal that India filed against the WTO’s February ruling. The WTO rejected India’s argument that the buy-local provisions of its solar program were “necessary to secure compliance” with India’s “obligations relating to climate change,” and implied that no challenged policy could be justified as “necessary to secure compliance” with the United Nations Framework Convention on Climate Change.

India must now decided whether to change their National Solar Mission’s policies or face trade sanctions from the U.S. But since several American states have buy-local provisions in their clean energy programs, India has also launched a WTO trade case against the United States.

Here are two opposing views of the actions of the WTO, the first from the Sierra Club and the second from the Solar Energy Industries Association in the U.S.:

“Today’s final ruling has undermined a successful solar initiative slated to bring us one step closer to tackling the climate crisis while creating local clean energy jobs. Yet the WTO has chosen to look beyond the world’s need for clean, modern, sustainable sources of energy, demonstrating the very real dangers harmful trade cases pose for our environment, our air, our water, and our climate…. With the Paris Climate Agreement on the brink of becoming our new international reality, the world has reached a precipice on our current model of trade: Do we continue with status quo corporate trade rules that are fundamentally at odds with climate imperatives? Or do we stop these harmful trade cases, reject toxic trade deals like the Trans-Pacific Partnership, and collectively move toward a responsible, climate-friendly model of trade? The choice couldn’t be more clear, and the time to act is now.”

Statement from Christopher Mansour, vice president of federal affairs for the Solar Energy Industries Association (SEIA):

“This is an important victory for the U.S. solar industry and America’s hard-working 209,000-plus solar employees. The National Solar Mission’s local content requirement unfairly discriminated against U.S. manufacturers and today’s decision will help even out the playing field….We applaud the Obama administration and the Office of the United States Trade Representative for their hard work ensuring the advancement of clean energy worldwide. Now that litigation is finally behind us, our hope is that India will quickly come into WTO compliance and we look forward to a path where the solar supply in both our markets can grow.”

About Tracey SmithTracey is an accountant and entrepreneur with a passion for nature. This passion is what spurred her interest in renewable energy, and the rest is history as they say. Tracey is a principal in Energy Think Group, the publisher of Solar Thermal Magazine and Tek-Think. She is also the principal at Women's Financial Help Desk. She spends her free time in the outdoors with her horses and dogs. She loves to travel.